Let Me Tell You What's NOT Going to Happen

The men in my family of my father's generation returned home after serving their country and got jobs in the local steel mills, as had their fathers and their grandfathers. In exchange for their brawn, sweat, and expertise, the steel mills promised these men certain benefits. In exchange for Social Security taxes withheld from their already modest paychecks, the government promised these men certain benefits as well.

Yes, they were union men: they paid their dues, occasionally went on strike, and negotiated (at least, on their part) in good faith with the mill for the best wages they could get for the back-breaking work that brought the mills profit. There was honor in the arrangement and a proud culture among the families of these workers that grew up in steel towns. These were church-attending, flag-waving, football-loving, honest family men. They are rightfully proud of providing homes and educations for their children and instilling the sorts of values and manners that serve them well as adults. And if I have to move heaven and earth, now that they've retired, the Republican party is NOT going to redefine them as welfare recipients.

My father currently has three sources of income: a pension from the mill, a modest IRA account, and Social Security.

As George Will noted on "This Week with George Stephanopoulos" yesterday, the President's Social Security plan is designed to reframe Social Security as "welfare." Stephanopoulos immediately agreed. "You've cracked the code," he said.

This is insidious and despicable. After a lifetime of work that's left many of them literally permanently crippled with pain, my father, and other workers like him around the nation, deserve much better than this.

The GOP sees this path as the easiest way to dismantle Social Security altogether. It's typical of their divisive methods---separate the classes and then paint the working class as parasites. As Krugman noted today:

The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn't driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.

No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.'s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.

My father, God willing, may live another 20 years or so, well into the stage when Bush and his silver-spoon-inheriting cronies intend to reframe the rhetoric. I expect this to become a very public debate. So, for the record, let me state that the first schmuck foolish enough to suggest my father or any of the retirees of his generation are "welfare recipients" will feel the full force of my boot up his ass, and then I'll get really angry.

Spare me the pointless promises Bush offered in his "press conference" the other day, too. The checks WILL keep coming, BUT they WILL keep coming with no stigma attached. If not, this country is headed toward a class warfare the likes of which it has never imagined. You don't f*ck with my father.

Comments

[Sebastian Holsclaw]

"All this talk about hoping not to need it misses one important aspect of what it's designed to be there in case of, financial catastrophe that falls AFTER one retires. The best planned portfolios or most "secure" nest eggs can disappear...and then what?"

Why am I paying them before that point? Is this a welfare argument?

My problem with this is that you want to be able to portray attacks on Social Security as a class warfare attack on poor people while simultaneously not wanting to call cash payments 'to avoid poverty' "welfare". You can't do both.

If SS were a pension fund, it should offer a much better return. If it were insurance against being poor when you are old, it shouldn't pay rich people. If it were insurance against living longer than the typical lifespan, it should have a sliding scale which goes up automatically with changes in life expectancy. If it were an anti-poverty program it shouldn't pay billions to the well off.

The way you get around these objections is by hopping from justification to justification and never allowing any of the justifications to be analyzed on their own terms. As welfare, SS is paying lots of the wrong people. As insurance, SS is paying lots of the wrong people. As a pension, it has an awful rate of return.

I also hate the slippery slope argument here. Let us purely for the sake of argument that Bush WANTS to get rid of Social Security entirely. So what? Does that mean that we can't means test? Does that mean we can't make it a better pension? Does that mean we can't do anything until only good Democrats are in charge? Ridiculous. Bush doesn't always get what he wants. If he proposes good ideas as a first step to getting rid of Social Security, take the good ideas and then resist him on the bad ideas. It is not an inevitable slippery slope that saying yes to Bush on the good ideas means that everyone must say yes to him on the bad ideas.

And if you can't convince people that we should keep POOR elderly people off the street you aren't doing well in the argumentation sphere. The idea that we have to bribe rich people with billions of dollars per year in order to have an anti-poverty program is ridiculous. You all do realize that there are welfare programs right now in the US. Right? You do realize that welfare reform--pushed by Republicans was very successful at lowering poverty while still maintaining a safety net. Right? Or would someone here like to talk about how the welfare reform of the 1990s was awful?

[Jonas Cord]

Bernard Yomtov,

I understand that mechanically this reduces the benefit for the better off, just like a straightforward reduction would, but I think the perception would be vastly different. I also think it would be a much more sensible approach.

This idea of yours is rather ingenious. I'd fully support it as a compromise provided that the increased taxation of the retired rich was used to offset payroll taxes amongst those still in the workforce.

[Slarti]

Scott:

I was going to note that Krugman's views on SS have been delightfully inconsistent, but I'm not all that hard over on consistency.

Edward:

I'm not making light of your father's problems, but it does sound like a) he's got some real issues with his company, and b) for the purposes of part of the discussion, at least, he is in fact poor. Your dad, bless him, has pride. Sometimes the price tag on pride is within one's means, and sometimes it isn't. If you haven't already done so, I encourage you to question the legality of the insurance termination; insurance companies make their bread and butter from people who cave in to things like that.

[Edward_]

It's not just my Dad, though, Slarti...there's an entire generation out there this is going to hit.

[Tad Brennan]

"an old person in poverty is far worse than a young person in poverty? Must be, since we're collecting money from the former to give to the latter"

It's also worth pointing out that ever since the '83 agreement, we have been collecting money from workers to give to the rich, in the form of endless tax-cuts.

[felixrayman]

My problem with this is that you want to be able to portray attacks on Social Security as a class warfare attack on poor people while simultaneously not wanting to call cash payments 'to avoid poverty' "welfare". You can't do both.

A non sequitur. How are those cash payments financed? Do people who have never paid in taxes currently receive retirement benefits?

If SS were a pension fund, it should offer a much better return.

You do not know the facts about the rate of return on SS if you believe that statement.

I also hate the slippery slope argument here. Let us purely for the sake of argument that Bush WANTS to get rid of Social Security entirely. So what?

So we will leave a successful program alone rather than trust someone who has shown he can not be trusted. It is as simple as that - Bush is not trustworthy. There is no pressing need to tinker with SS, there is only a pressing need to reduce deficit spending.

You all do realize that there are welfare programs right now in the US. Right?

And I believe the last time I saw you discuss one, you ranted about "crackheads". That validates the point of Edward's piece.

[Edward_]

i realize that last comment needed some clarification, but I got to run...ignore it please.

[sidereal]

That's the part that kills me. The part that nobody who supports Social Security should ever stop talking about. Edward's dad hasn't been paying for his retirement. He's been paying for highways and nuclear subs and 100 dollar paperclips and whatever else the gov wanted to spend his SS contributions on. He bought those because taxes were very progressive in the 70s, and the wealthy didn't want to pay for them. So now that taxes are much flatter, they're willing to let the middle class pay Edward's dad back. Oh, and Bush says we don't even have to do that. It's just worthless IOUs. Silly paper. He event went and looked at them to make sure. Jackass.

[Slarti]

It's also worth pointing out that ever since the '83 agreement, we have been collecting money from workers to give to the rich, in the form of endless tax-cuts.

Spare me. I have, after all, been sparing you the flipside of this. Max does note, does he not, that the top couple of deciles pay about half of the total income tax? Do you suppose that all of that money comes rolling back into the hands of those same people?

[notyou]

If it were insurance against being poor when you are old, it shouldn't pay rich people.

Go ahead, Mr Holsclaw, think of it as insurance -- that's what the 'I' in OASDI stands for.

As to your question: 1) I'm a healthy guy, been paying for my own health insurance for several years (self employed) but can afford to pay for my glasses, allergy medication, and etc if I wanted to (and come out ahead). Why don't I? Related, why doesn't my insurance company prevent me from accessing their services given my general state of good health? 2) The program is already means tested, in a way -- benefits are capped, just as FICA taxes are capped.

We could certainly make accepting the SS benefit voluntary -- perhaps even allow beneficiaries to steer their checks into preferred programs or charities.

[Ken]

"The part that nobody who supports Social Security should ever stop talking about. Edward's dad hasn't been paying for his retirement. He's been paying for highways and nuclear subs and 100 dollar paperclips and whatever else the gov wanted to spend his SS contributions on. He bought those because taxes were very progressive in the 70s, and the wealthy didn't want to pay for them."

Well, except they did pay for them to a far greater degree than anyone else.

"So now that taxes are much flatter, they're willing to let the middle class pay Edward's dad back. Oh, and Bush says we don't even have to do that. It's just worthless IOUs. Silly paper. He event went and looked at them to make sure. Jackass."

Bush disputed the idea that Treasury bonds, in the hands of a government agency, were assets. They weren't. Your own bonds are not assets, and they can never be assets. The Social Security Administration doesn't have any "savings" - it has IOU's from the treasury, which means that using those bonds to pay benefits to seniors is not an alternative to taxing younger people, it's a mechanism for taxing younger people. The ultimate question is (1) should our children bear a heavier burden to support retirees than we do and (if yes), (2) why?

And Bush didn't say anything about not paying your dad back. Your dad will get paid back no matter what. The contention is over whether you and I will collect enough from our children to place a far heavier burden on them than your dad is placing on us, and I'm voting no on that. Your dad's payback is safe.

[felixrayman]

Max does note, does he not, that the top couple of deciles pay about half of the total income tax?

What percentage of wealth do the top couple of deciles own? And, as tax laws have become more regressive over the last few decades, has this proportion gone up or down?

[Tad Brennan]

Slartibartfast--

" Max does note, does he not, that the top couple of deciles pay about half of the total income tax?"

Hmm--it took me a bit to figure out who "Max" is, and then I tried to read *real* careful to make up for my past sins, but I still can't see anywhere that he notes this. (Or are you asserting it on your own behalf, and criticisizing him for *not* noting it?)

He *does* note that the top quintile took in 48% of the income. But I don't know whether that means that they pay about half of the total income tax or not. I would have thought in general that the wealthy have much better accountants than the rest of us, and so are able to avoid a greater share. Beats me--neither my prejudices about tax avoidance among the rich nor Max Sawicky's references to their share of income are really worth as much as some straight numbers about their share of taxes paid.

Suppose that the top couple of deciles did in fact pay about half the total tax revenues. Would this change the fact that the last few decades saw repeated tax cuts on the top end of the scale, and that these tax-cuts were financed by dipping into the SS fund?

[Ken]

Actually, the best reform I can think of is simple: deregulate the living crap out of the medical system, including the complete shutdown of the FDA. Keep limited patent protection, strong in nature but with no extensions.

Then when the cure for aging gets cheap enough for most people to afford it, consign Social Security and Medicare to the dustbin of history. People can save up and take a few decades off, or keep working until accident or homicide does them in, and the rest of us don't have to care because they'll be able-bodied the whole time and their having to keep working won't make us look bad.

[CharleyCarp]

The only way SS reform works is as a deal. Sebastian wants to make a deal, and if his side would hold up his end of the deal, I'd say it might be worth doing. The thing is, no one on "my" side thinks that his side will stick to the deal. That is, no one thinks that the people who've never liked SS won't come back to the well in another decade looking for more cuts, and then again a decade later, and so on until the program is gone.

And as much as we might like Sebastian, and as sincere as he might be in making the deal, we know that he can't bind his side.

The fact that his side keeps saying that they don't need to make a deal, but that they'll ram through the changes they want makes people on my side of the thing all the less trustworthy.

The good news is that there is nothing about SS that has to be done in 2005. We can easily wait for divided government -- or maybe a Republican administration that can be trusted -- and have a deal that does right by everyone involved. There is a real possibility that the low cost scenario will pan out, and we never needed to do anything. I'm not saying we should assume that there is no problem. I am saying that this issue, which affects everyone, need not be considered in the current configuration.

[ral]

felixrayman, I don't have the book handy, so I can't just give you numbers, but a useful reference as well as a good read is Kevin Phillips' Wealth and Democracy.

And, as tax laws have become more regressive over the last few decades, has this proportion gone up or down?

I think you already know the answer (or was the question rhetorical?) -- we are seeing a strong flow of capital to the top, even the very top.

[Gromit]

Actually, the best reform I can think of is simple: deregulate the living crap out of the medical system, including the complete shutdown of the FDA. Keep limited patent protection, strong in nature but with no extensions.

Then when the cure for aging gets cheap enough for most people to afford it, consign Social Security and Medicare to the dustbin of history.

Hey, without the FDA's boot on our necks, I'm sure someone could market a fast-acting and effective cure for aging right away. I've got all the necessary ingredients under my kitchen sink as we speak.

[Slarti]

I've got all the necessary ingredients under my kitchen sink as we speak.

Me, too! And you can buy into my new company for a mere $44 trillion.

I promise to spend it wisely.

[liberal japonicus]

Sorry, a behind the curtains sort of question. Why the handle change from Slartibartfast to Slarti?

[Sebastian Holsclaw]

"The thing is, no one on "my" side thinks that his side will stick to the deal. That is, no one thinks that the people who've never liked SS won't come back to the well in another decade looking for more cuts, and then again a decade later, and so on until the program is gone."

Funny thing is if the 'deal' involved Israel and Palestinian's who won't give up terrorism, many people here would be all for it. :)

[M. Scott Eiland]

Sorry, a behind the curtains sort of question. Why the handle change from Slartibartfast to Slarti?

Isn't it obvious? With the movie coming out, the poor man's trying to avoid being deluged with requests to autograph fjords. :-)

[Jeff Eaton]

Ted: "And an old person in poverty is far worse than a young person in poverty?"

Yes, this seems pretty obvious. The difference between a 22 year old guy living below the poverty line and a 72 year old guy living below the poverty line is rather dramatic. Moving across the state and hustling up a job as a cashier, a server at Chili's, a janitor, a bookstore clerk... Getting into a cheap community college course and learning some new job skills, things like that... Those are things that the young can do that are not very realistic expectations of the elderly.

By the logic you seemed to outline, a 2-year old living at the poverty level should be left to fend for itself, too. Age doesn't matter, after all...

[Bernard Yomtov]

The Social Security Administration doesn't have any "savings" - it has IOU's from the treasury, which means that using those bonds to pay benefits to seniors is not an alternative to taxing younger people, it's a mechanism for taxing younger people.

No. This is incorrect. Suppose the SS surplus had been invested in private securities instead of government bonds. Then the government would have had to borrow that money elsewhere. Instead of owing whatever it owes to the Social Security Trust Fund, it would owe it to whoever had bought the bonds it issued. It would still need to collect taxes to pay these bondholders.

The need for taxes to repay the bonds has zero to do with the fact that they are held by Social Security. Zero.

[Francis / Brother Rail Gun of Reasoned Discourse]

wow, has this thread declined or what?

First, let's stop the IOUs to yourself nonsense. If you believe that the SS ious have no value, go join the group grope over at Jane Galt's site. The rest of us here understand that corporations can create special purpose entities and so can the govt. While the Congress could, in theory, eliminate the SSA with one stroke of the pen, the fact that it hasn't done so for 60 some odd years is pretty good evidence that the Congress, and the voters, regard the SSA as a legitimate special purpose entity holding legitimate claims on the general treasury.

second, i have yet to see any private pension calculator that (a) folds in the cost of the original legacy debt; and (b) includes the disability insurance component; and (c) includes the linkage to wages. While the conservatives here may despise Atrios, Duncan Black is a competent and qualified economist, as is Brad DeLong. Both of them have torn to shreds the various CATO calculators purporting to show how bad of an investment SS is. To the conservatives here, I DARE YOU to prove them wrong; SHOW ME the alternative instead of bitching and moaning about how we liberals are mean to you.

third, if SS is such an awful program (based on a lie, according to M. Scott), why is it so difficult for the President to come up with a fix? Edward _ is out gunning for the Pres because he does nothing but attack the program, but is unwilling/unable to do better.

fourth, I have repeatedly asked what a "hard" means test would look like. Getting americans to pay income taxes is hard enough; do the conservatives here really expect them to stand for a program which inquires on an annual basis how wealthy they are? If I understand medicaid correctly (likely i don't; this is anecdotal only), recipients must demonstrate that they are essentially utterly impoverished before qualifying. PLEASE, enlighten me as to how a means-tested program would work.

fifth, if the real complaint is that the young poor are paying for the old rich, isn't the answer to increase the EITC, to offset more of the pension costs? Maybe the foregiven SSA payments should be carried as an imputed loan, so that the taxpayer can make up the payments when he can afford it. I think that's probably unnecessarily cruel, but it's at least an answer to a principal complaint that doesn't involve destroying the program.

[ral]

I wonder whether this wasn't the plan all along, back in 1983 when Alan Greenspan engineered the trust fund.

I shudder when I consider that he (Greenspan) actually helped sell the first GWB tax cut by expressing his concern that we might be paying off the deficit too quickly.

[M. Scott Eiland]

No. This is incorrect. Suppose the SS surplus had been invested in private securities instead of government bonds. Then the government would have had to borrow that money elsewhere. Instead of owing whatever it owes to the Social Security Trust Fund, it would owe it to whoever had bought the bonds it issued. It would still need to collect taxes to pay these bondholders.

That assumes that the government would have borrowed as much money without the convenient sinkhole of the SS surplus to hide the size of the deficit--given the anxieties over the deficit in the late eighties that culminated in the 1990 tax increase that cost Bush the Elder his job, that's not a given.

[ral]

[for "deficit," above, read "national debt."]

[Nicholas Weininger]

Sebastian: not to threadjack here, or to deny your (very good) point about justification-hopping and SS, but-- you do realize that a very similar justification-hopping critique can be made of the case for the Iraq war, right?

[Phil]

If he proposes good ideas as a first step to getting rid of Social Security, take the good ideas and then resist him on the bad ideas.

::::snort:::::

Assuming for a moment that there is a nontrivial number of currently-serving Republican Senators and Representatives, can you show me one single instance where they have in any way resisted any of what might be considered by a reasonably neutral observer to be a single one of Bush's bad ideas?

[Phil]

That first part before the comma should read, " . . . a nontrivial number of currently-serving Republican Senators and Representatives who might find any of Bush's SS ideas 'bad,' . . . "

[Bernard Yomtov]

That assumes that the government would have borrowed as much money without the convenient sinkhole of the SS surplus to hide the size of the deficit--given the anxieties over the deficit in the late eighties that culminated in the 1990 tax increase that cost Bush the Elder his job, that's not a given.

True, and I share your implied disdain for the accounting methods that were used. But I want to see a stronger argument than that before believing spending would have been less. If you make that claim you are really saying there was never any intention to repay the money to SS.

[123concrete]

S.S. is alot like welfare. You take money from people who earned it and you give some of it to people who didn't earn it.

I don't see the big gripe in framing the debate that way.

[Phil]

You take money from people who earned it and you give some of it to people who didn't earn it.

Given that everybody who gets a paycheck pays for it, which people didn't earn it?

[Francis / Brother Rail Gun of Reasoned Discourse]

Aren't the people who caused the legacy debt, the first recipients, dead?

[123concrete]

"which people didn't earn it?"

The people who got more out over time than they actually paid in.

[Phil]

The people who got more out over time than they actually paid in.

Oh. Well, shame on them for not dying more conveniently.

[felixrayman]

The difference people seem to be ignoring here in defining SS as welfare is that welfare is assistance to people in need. SS is not based on need, and SS is not welfare.

Now there are those that would like to turn SS into a welfare program, by means testing it for example, and it is clear that some of those people are ideologues who want to do so as part of a plan to destroy the program.

But as for now, SS is not welfare, any more than flood insurance is welfare for people who end up having to collect on it.

[CaseyL]

There's nothing wrong with SocSec that wouldn't be fixed by lifting the salary cap.

You can dance around that all you like. You can repeat GOP talking points until you're old enough to qualify for SocSec yourself. You cannot get around the fundamental point: SocSec is not in a "crisis," and the projected budgetary shortfall could easily be corrected by an Administration that wasn't hell-bent on eliminating the program.

Scratch a "SocSec reformer" and you find a SocSec eliminationist. It's supporters have made that clear ("Hey, hey; ho, ho; Social Security has got to go!"). Bush's "reform" is a lie. He's been predicting that SocSec would go bankrupt since 1983, when he said it would be bankrupt by 1993; all he's doing now is trying to ram through a policy that will make good on that prediction.

He has no good faith from which to make his argument. His record as a businessman is disastrous: every business he ever owned went belly-up, usually scandalously, and always with Bush walking away with a hefty payout. His Admnistration's economic policies have been a disaster; a deliberate disaster meant to benefit the top 5% at the expense of everyone else.

His SocSec policy is more of the same: a con game.

[Sebastian Holsclaw]

"the projected budgetary shortfall could easily be corrected by an Administration that wasn't hell-bent on eliminating the program."

If you are hell bent on raising taxes you are quite correct but you are underinclusive. If you just want to raise taxes there is not only no Social Security crisis, there is no possible federal budgetary crisis.

BTW, dropping the cap would be the abandonment of the last bit of justification remaining in the "it's a pension" game. The cap on the tax exists in response to the cap of the entitlement on the payout side.

[Bernard Yomtov]

There's nothing wrong with SocSec that wouldn't be fixed by lifting the salary cap.

CaseyL,

Actually, there's not much wrong with Social Security regardless. The simple fact is that the scheme adopted in 1983 works, and will work well past 2041, and quite conceivably forever. It is crucial that that point be understood.

The relevant facts are these: The SSA prepares three projections of the system's future, based on a variety of assumptions regarding the future of the US economy. The one most often cited is the intermediate projection. That's the one that has the trust fund running out in 2041. But the intermediate forecast is very pessimistic. Even the "low-cost" forecast, the most optimistic of the three, is pessimistic in the light of recent economic performance. It is quite likely to be exceeded. Indeed, in one sense the "low-cost projection" is not a projection at all. It is a description of how the economy must perform for the trust fund ratio to remain steady, i.e., for there to be no problems with Social Security.

From the http://www.ssa.gov/OACT/TR/TR04/II_project.html#wp105057

">trustees’ report:

The low cost alternative is characterized by assumptions that improve the financial condition of the trust funds, including a higher fertility rate, slower improvement in mortality, a higher real-wage differential, and lower unemployment.

Why is there a potential problem? Because meeting the obligations to the trust fund imposes a burden on the Treasury that many people do not wish to bear. In other words, we do not have a Social Security problem, we have a fiscal problem, brought on in large part by the utter irresponsibility of the current Administration.

Now I am perfectly willing to address this problem by, for example, adopting measures such as I propose above. But I must say it is infuriating to hear people talking about a crisis in SS, and advocating all sorts of changes, and pretending to be hard-nosed realists, as they all the while refuse to acknowledge the true nature of the problem.

[John Thullen]

Great post, Edward. I don't want to marry you, but I will pledge myself to the guerilla war.

And, by the way, when Sebastian and Von are named eternal caretakers of a means-tested Social Security (and Medicare) program, I will consider negotiations at a posh venue in Paris.

But, I'll live in a tunnel during the rainy season before I compromise with the crowd in control now. Never.

[Tad Brennan]

Mr. Holsclaw--

"dropping the cap would be the abandonment of the last bit of justification remaining in the "it's a pension" game"

Well, no; I should think that making SS payouts available to people who had never worked or paid in any contributions at all would be "the abandonment of the last bit of etc."

I.e., *one* reason to think that "it's a pension" is because *you don't get anything if you didn't pay in*. (Note the connection between this point and Edward_'s insistence that his father is not going to be collecting welfare).

I haven't yet understood why you feel that the SS system should map directly and uniquely on to the set of options {pension, insurance, welfare, anti-poverty}. What is the problem--politically, intellectually, analytically, whatever you like--with it being a program that incorporates various features of all of these kinds of programs?

It sounds as though you feel that your opponents are being dishonest or inconsistent somehow. But I'm not seeing it. So I say it has some features of a pension system (e.g. you have to pay in to get back out), and then later I say it has some features of an insurance system (e.g. risk is spread out over the whole working population).

Did I ever say "p and not p" there? Did I first say that it has some features of a pension system, and then later deny that it has any features of a pension system? That would certainly be a contradiction, but I don't see where the people protecting SS from phase-out are committed to it.

[Slartibartfast]

Why the handle change from Slartibartfast to Slarti?

Accidental, and it stuck. Kind of like some other commenters here, I suspect. See, I changed it back. Happy?

[Slartibartfast]

If you believe that the SS ious have no value, go join the group grope over at Jane Galt's site.

Yes, do. Please be sure and actually address the argument, when there.

[rilkefan]

But, I'll live in a tunnel during the rainy season before I compromise with the crowd in control now. Never.

John, given that crowd, you may in fact find yourself living in a tunnel during the rainy season. At which point I guess you'll have time to consider how long "never" is.

[Slartibartfast]

Why is there a potential problem? Because meeting the obligations to the trust fund imposes a burden on the Treasury that many people do not wish to bear.

By this logic, any federal budgetary issues at all can be dismissed with "many people do not wish to bear". Not smart/not smart, or good/not good, but wanna/don't wanna. I'd offer some more analysis, but I don't wanna.

[Tom Maguire]

I think that stigmatizing a twenty year old welfare recipient who has never worked would be an easier task than stigmatizing a 70 year old retiree who has paid into a retirement program for fifty years.

However, Democrats have made a career of identifying the latest Republican scheme to dismantle Social Security. Or, as we say, "there you go again".

And frankly, I am dismayed by the lack of faith the liberals here have in their fellow man, and fellow members of the working and middle class. Is there really general agreement with Krugman's adage that "programs for the poor always turn into poor programs"?

Can't a program that burdens 80% of the population to provide benefits to the bottom 20% survive? Or must we structure the program so that 20% are burdened to pay benefits to 80%?

And what is "liberal" about that?

P.S. And when was welfare phased out?

[Francis]

slarti, you're welcome, really truly welcome to debate the issue here with me. Personally, i comment here to avoid echo chambers. i'll note that you haven't responded to any of my substantive points.

try this: IF SSA is a SpecialPurposeEntity THEN ious have economic value.

characteristics in support of "spe":
1. 60+ years of separate existence.
2. until just recently, presidential, congressional and mainstream press recognition as a spe.
3. 14th amendment, section 4.
4. dedicated revenue and obligation streams.
5. in the mid-80s, a major campaign to pass laws to "overtax" a certain group, so that "funds" would be available on their retirement.

so the Congress can change laws. So what? The Congress can do all sorts of stupid things that would fundamentally change american tax laws. Mostly they don't. IBM could dissolve its spe's and merge them back into the parent corp. Mostly it doesn't, for essentially the same reason: it made a promise.

[Slartibartfast]

slarti, you're welcome, really truly welcome to debate the issue here with me.

As I recall, you had an issue with AI; I suggest you take it to the source. I know it's hard to notice, but there's a fairly even split betwen those supporting the thesis and those dead-set against.

i'll note that you haven't responded to any of my substantive points.

Relevant to the I-owe-me issue? I must have missed them.

[Slartibartfast]

IOW, francis, if you're not engaging those making the points you're objecting to, you're simply abusing them in effigy. Maybe fun, but fairly useless.

[Francis]

slarti, virtually all blogging is useless. (i keep hoping katherine makes a difference.) but a careful review of myupthread posts shows that i was, in fact, responding to those who were posting HERE about the IOU issue. i was encouraging those idiots to join the group grope at Assym Info; i was not addressing mindles's post here.

[Slartibartfast]

Ah. Well, neither am I, so what the hell were we talking about, before the IOMe thing came up?

[liberal japonicus]

See, I changed it back. Happy?

Only if you are. I just wasn't sure if someone was playing a trick or not. Remember, people have been put on the terrorist watch list for less...

[Edward]

Fascinating.

And frankly, I am dismayed by the lack of faith the liberals here have in their fellow man, and fellow members of the working and middle class.

You both deny it's likely to happen and then demonstrate it's already happening, Tom Maguire:

Can't a program that burdens 80% of the population to provide benefits to the bottom 20% survive?

If SS gets framed this way, and clearly to some it already has, it's next to "welfare" already.

The problem with this nonsense is that in all reality my father is not likely to recieve anywhere near as much back from Social Security as he paid in over the 40+ years paid into it, so the "burden" you're describing was his burden and the "bottom" 20% you describe so derogatorily are in the exact same position anyone in what one must assume you'd label the "top" 80% are in, in that possibly, just possibly, they'll live long enough to receive more back than they paid in. But so will the top 1% or top 0.01% (in fact, given tht they're more likely not to have the health problems working in a steel mill cause, they're more likely to live long enough to earn back more than they paid in).

[Slartibartfast]

The problem with this nonsense is that in all reality my father is not likely to recieve anywhere near as much back from Social Security as he paid in over the 40+ years paid into it

Which neatly sums up the Republican position on SS. One of them, anyway.

[Edward_]

"one of them"

and Sebastian criticizes the Liberals for moving the argument all over the place.

If my father does outlive his genetics and family history, though Slarti, he still deserves to live comfortably and with dignity. That's what he was promised. That's the the US government owes him.

[Tad Brennan]

Slartibartfast--

I'm not sure Edward_'s numbers are right here--whether his father will receive more or less than he paid in depends on too many factors (age at death, income history, inflation changes, etc.).

But *this* Democrat's position on SS is that any loss I personally take on the deal will be more than made up for by the benefits I reap by living in a country with a national system of Old-Age and Survivors' Insurance and Disability Insurance.

That's a Democratic position on SS. One of them, anyway.

[Jesurgislac]

Slarti: Which neatly sums up the Republican position on SS. One of them, anyway.

Possibly. But certainly not George W. Bush's position.

[Bernard Yomtov]

By this logic, any federal budgetary issues at all can be dismissed with "many people do not wish to bear". Not smart/not smart, or good/not good, but wanna/don't wanna. I'd offer some more analysis, but I don't wanna.

Big difference, slarti.

This is not, "I don't want to spend that much on X," or even, "I think it would be unwise to spend that much on X because..."

This is "I don't want to meet financial obligations that were agreed to. I don't want to repay borrowed money. " It is no different than refusing to repay other treasury obligations because we just don't want to.

Remember, this deal had real consequences. Workers paid increased payroll taxes on the understanding that the purpose was to shore up Social Security, not to eliminate the estate tax or reduce taxes on dividends. Now suddenly Bush is saying precisiely "I don't wanna pay - worthless IOU's, blah blah blah."

We hear a lot from the right about morality, but it apparently doesn't extend to honoring financial obligations.

[Slartibartfast]

Now suddenly Bush is saying precisiely "I don't wanna pay - worthless IOU's, blah blah blah."

Abuse of the word precisely aside, just where is he saying anything resembling that?

But certainly not George W. Bush's position.

Which simply indicates that you're not listening to what he's actually saying, Jesurgislac. Go read the transcript of his last press briefing, and then tell me how your position is justified. Hey, justify your position with anything at all that Bush has said.

[ral]

We hear a lot from the right about morality, but it apparently doesn't extend to honoring financial obligations.

Bernard, it's just a matter of definitions. "Faith," for example:

Why should I buy a Treasury security?

Treasury securities are a safe and secure investment option because the full faith and credit of the United States government [emphasis added] guarantees that interest and principal payments will be paid on time. Also, most Treasury securities are liquid, which means they can easily be sold for cash. The Basics of Treasury Securities

Sometimes I wonder whether words have any meaning.

[Slartibartfast]

Sometimes I wonder whether words have any meaning.

Apropos of what, exactly?

[Tad Brennan]

ral--

"Sometimes I wonder whether words have any meaning."

Don't despair--political discourse has not always been so thoroughly poisoned as it is right now, and political leaders have not always distorted and lied as much as they do now.

Like people, countries do not alway show their best sides in crisis. This country took a big whack to the head on 9/11, and it will take a while for it to regain its equilibrium and sense of traditional values. A few opportunists realized that they could maximize their own power by keeping the country destabilized and afraid, but as time goes by America will come to its senses.

[Slartibartfast]

It is no different than refusing to repay other treasury obligations because we just don't want to.

Wait. What is no different than refusing to pay other treasury obligations? Antecedent, please?

[Slartibartfast]

It is no different than refusing to repay other treasury obligations because we just don't want to.

Wait. What is no different than refusing to pay other treasury obligations? Antecedent, please?

[ral]

Slart, I added emphasis above, wasn't it clear? The securities held in the trust fund are U.S. Treasury securities, no different from those held by individuals, pension funds, and other governments.

For the President of the United States to say "[t]here is no trust fund just IOUs that I saw firsthand," is a breach of faith.

[Slartibartfast]

The securities held in the trust fund are U.S. Treasury securities, no different from those held by individuals, pension funds, and other governments.

Sometimes Wiki has the answer, if you only look hard enough. Search on "negotiable".

[ral]

Tad, thanks for the kind thoughts. I am by nature mostly optimistic, but every so often I have a flash of despair.

I write a lot of words, here and in my professional life. I like to think they mean something. I sometimes act as an expert in litigation, and I once heard a lawyer in a patent case I was involved with make the comment "it's all words." I wasn't sure of his meaning at the time, whether it was dismissive of the value of expert knowledge. But it brought to mind the line from Hamlet

Polonius: What do read, my lord?

Hamlet: Words, words, words.

[felixrayman]

Search on "negotiable"

Would you argue that were Congress to make the securities negotiable, no one would buy them? Because if you wouldn't you are being irrelevant, and if you would, you are being incoherent. Assuming we take Wiki as a reliable source, the bonds are backed "by the full faith and credit of the government". What does this mean to you? Nothing?

Also, the article you linked to points out that Bush claims that SS will go broke in 2042. What happens to SS in 2042 that Bush is referring to?

So many contradictions, so little time. What remains unobscured is that a deal was made with taxpayers to raise SS taxes in order to preserve the system, and that the only real question is, "Should we break that deal in order to finance tax cuts for the rich"? My answer is no, yours is yes. Let's at least be clear about that.

[Bernard Yomtov]

Abuse of the word precisely aside, just where is he saying anything resembling that?

You're murder on my adverbs, slarti.

West Virginia?

Bush has repeatedly complained of the cost of meeting the obligations to the trust fund. He has said there is no trust fund, just "IOU's." That sounds to me like he really doesn't want to pay, especially since, in the face of what he sees as this terrible burden, he insists on continuing his tax-cut madness. If you had borrowed a lot of money, and were seriously concerned about repaying it, would you quit your job to live on the beach?

In any case, all we really need to note is that he is proposing benefit cuts. This changes the deal. It effectively reduces the treasury's obligation to the trust fund. Is it really unreasonable to conclude that he doesn't want to meet the obligation?

[Slartibartfast]

Would you argue that were Congress to make the securities negotiable, no one would buy them?

Hadn't even thought about arguing that, thanks.

What does this mean to you? Nothing?

It means precisely what it says. What's it mean to you?

My answer is no, yours is yes.

You know, I absolutely loathe having discussions with people who make up my position on X and then swat it as if it were anything other than straw. Grow up, felix, this is an adult conversation.

[Slartibartfast]

That sounds to me like he really doesn't want to pay

There's a key aspect of that sentence that you might want to reconsider.

In any case, all we really need to note is that he is proposing benefit cuts.

Good grief, is anyone at all paying attention? No, he's saying it's going to be either benefit cuts, a tax hike, or some combination of the two. Of course we could just pack it all away in more debt...

[Ken]

"This is "I don't want to meet financial obligations that were agreed to. I don't want to repay borrowed money. " It is no different than refusing to repay other treasury obligations because we just don't want to. "

No one's talking about weaseling out of financial obligations already agreed to. What we want to do is limit the new financial obligations we're agreeing to for the future. Your dad will be paid what he was promised. I want to be promised lower benefits for when I retire so I can plan accordingly, and so my kids and grandkids won't carry even greater Social Security burdens than I do.

"The rest of us here understand that corporations can create special purpose entities and so can the govt. While the Congress could, in theory, eliminate the SSA with one stroke of the pen, the fact that it hasn't done so for 60 some odd years is pretty good evidence that the Congress, and the voters, regard the SSA as a legitimate special purpose entity holding legitimate claims on the general treasury."

But as far as the taxpayers are concerned, those "legitimate claims" are liabilities, not assets. There's no savings there, only a promise to tax future taxpayers to pay off the bonds. Both the "special purpose entity" and the "general treasury" have no income other than taxes. The question is whether the future taxes already pledged to be collected to redeem those bonds will be enough to cover promised future benefits. If we promise lower future benefits, it might be. If not, then future taxpayers will have to cover those bonds (which they would anyway, as soon as they were redeemed) plus kick in additional money to fund the shortfall. I don't want to see that happen.

[felixrayman]

Hadn't even thought about arguing that, thanks.

The irrelevance option. Nice.

It means precisely what it says. What's it mean to you?

It means you can count on the government to live up to the deals it makes, for example the deal that SS taxes would be raised in order to preserve the current system.

You know, I absolutely loathe having discussions with people who make up my position on X and then swat it as if it were anything other than straw. Grow up, felix, this is an adult conversation.

I loathe having discussions with those who refuse to accept the implications of their arguments, yet, as an adult I know it is necessary. So grow up yourself, kid.

[Slartibartfast]

It means you can count on the government to live up to the deals it makes, for example the deal that SS taxes would be raised in order to preserve the current system.

If you see me arguing otherwise, please let me know.

You know, on second thought: don't bother. You seem to be having a wonderful time whacking the strawman, and you don't need me for that.

[felixrayman]

No one's talking about weaseling out of financial obligations already agreed to

Yes, they are. Benefit cuts to taxpayers currently paying in to the system amount to weaseling out of the deal made to raise SS taxes in order to preserve the system. And every plan Bush has come up with so far involves benefit cuts.

The rest of your post is simply a non sequitur. Whether and when taxes will need to be raised to continue the current level of benefits depends on the assumptions made. Using the assumptions Bush has made when advocating his plans, SS will be fine for a very long time, allowing the government to work on more pressing matters.

[Edward_]

Benefit cuts to taxpayers currently paying in to the system amount to weaseling out of the deal made to raise SS taxes in order to preserve the system. And every plan Bush has come up with so far involves benefit cuts.

Actually, I agree with that. Although I'm socking it away for retirement, I have been working nearly fulltime since I was 16-years-old and without revealing my age (gotta have some secrets), let's just say that adds up to quite a bit of SS tax money I had assumed would be there for me when I retire. I don't like the sound of benefit cuts at all.

[Bruce Baugh]

Two comments, one a retread and one (I think) not, each with a question.

Retread: I agree with those who say that any analysis that leads to Social Security being in crisis leads to lots of other things being in much worse and more immediate crisis. Is there any summary of what happens when you apply the same assumptions and techniques to a whole bunch of other agencies?

Not so retread: I have myself dealt with SSI, and know others who have, and have seen that it leads not just to incentives to lie (thanks to weirdly constructed definitions of assets and needs) but to a great deal of probably avoidable expense - monetary, administrative, time - in evaluating appeals. I am frankly skeptical that when the full costs of means testing as the federal government practices are considered, there is any significant savings in means testing versus a wider-ranging "you're all covered" policy. Has anyone actually tracked down what means testing costs (and what sort of social deformations it creates near the margin), before asserting that it would be a gain?

[Edward_]

Has anyone actually tracked down what means testing costs (and what sort of social deformations it creates near the margin), before asserting that it would be a gain?

That is a very good question.

One of the original virtures of Social Security Insurance is its relatively low administration costs. Add in means testing, and inspectors to catch cheats, and you're undoubtedly increasing those costs. What are they estimated to be?

[Bruce Baugh]

I should make it clear here that I don't know what means testing actually costs for SSI, Medicare, and the like, either. No assertion by obscurity here, just a genuine request for information, along with the expressed suspicion that some of its advocates may know o more or even less than I do about it.

[Bernard Yomtov]

Good grief, is anyone at all paying attention? No, he's saying it's going to be either benefit cuts, a tax hike, or some combination of the two. Of course we could just pack it all away in more debt...

Yes he is saying that, but his choice seems to be strictly benefit cuts. Am I wrong about this? Has Bush suggested that a reasonable solution is to increase taxes and use the proceeds for Social Security? If so, I missed it. Sorry.

[Phil]

Bruce and Edward: I asked the same question re: the cost of means testing to Sebastian upthread in my May 2, 2005 04:08 PM. I assume he no longer reads my comments, but maybe he'll pay attention to you.

[Jesurgislac]

On a much earlier thread about Social Security, my recollection is that Sebastian was challenged to prove that a means-tested system would be cheaper than the present system, when other countries who had introduced means-tested systems had found them much more expensive.

As I recall, he failed to do so then. I don't anticipate him doing any better now.

[Edward_]

without piling on Sebastian, who does not work for the administration (...I think...), has anyone seen any estimate of what means testing would cost?

[Slartibartfast]

Current administrative costs are about $3 billion a year, FYI. This is not intended to answer the means-testing question, it ought to go without saying.

[Sebastian Holsclaw]

"One of the original virtures of Social Security Insurance is its relatively low administration costs. Add in means testing, and inspectors to catch cheats, and you're undoubtedly increasing those costs. What are they estimated to be?"

It depends on how you choose to means test. Rough income testing could be done using the already existing IRS data which is collected every April 15.

[Slartibartfast]

Hmmm...means-testing doesn't have to be all that smart, now does it? Here I was thinking that means-testing would have to consider assets, but who on earth would take a relatively meager income from SS when they've got a couple tens of millions of dollars in a 401k? And if they do, you can always hammer their estate for the outlays (plus a penalty, natch) after the fact.

[Bruce Baugh]

In the case of means testing for SSI and Medicare, at least, the detailed determination is really detailed. And really harsh, and subject to tweaking whenever there's a scandal (however statistically unusual the nature of the alleged ripoff), and it all comes back to someone saying "Well, $X of assets isn't really needy, now, is it?" So honest poor people end up divesting themselves of more than dishonest ones, and suffering through more hassle to prove that they are indeed needy.

That moral skewing is one of the reasons I gave up my own support for most means testing, actually. It rewards the manipulation of facts and their presentation anywhere at all near the margin of eligibility, whereas I want to...if not actively encourage honesty, at least not discourage it or make it economically disadvantageous.

Sebastian, income testing would obviously not be enough for Social Security purposes, or at least if it would it's wildly unlike SSI, Medicare, and the like in that regard. You will have to evaluate the worth of assets, and I don't believe that can be done in a way that combines fairness, efficiency, and reward for honesty. Making an entitlement or social insurance measure universal gets the government out of the business of caring about the details, and of engaging with them in ways that will necessarily be subject to the usual political manipulation.

Jesurgliac, do you happen to have a pointer handy? The experience of other countries would at least be indicative.

[Edward_]

The experience of other countries would at least be indicative.

Arghh...has Justice Kennedy's experience taught you nothing, man? ;-)

later all...

[Slartibartfast]

Heh -> Edward.

[kenB]

In the case of means testing for SSI and Medicare, at least, the detailed determination is really detailed.

Medicare? Do you mean Medicaid? There's no means-testing for Medicare that I know of, although starting in 2006 there will be some sort of qualification process for receiving a subsidy for the new drug benefit.

[Jesurgislac]

Bruce: The experience of other countries would at least be indicative.

I did find a couple of articles at the Citizen's Advice Bureau website: Means testing undermines long-term viability of Pension Credits system and Means testing failing poorest pensioners.

For what it's worth, also, a Conservative party spokesman arguing against means tests.

[Phil]

Rough income testing could be done using the already existing IRS data which is collected every April 15.

Um, no. Not so much. Income has nothing to do with wealth, assets for the purposes of means testing, since, without wealth or assets, income can vary wildly from year to year. Unless you're proposing that we constantly bump, re-add, and re-bump people from the SS rolls based on their 1040s every year, the administrative costs of which I'd imagine would put the current costs to shame.

[Sebastian Holsclaw]

Jesurgislac, I'm not willing to count people who fail to apply for a benefit under 'means testing failing poorest pensioners'.

"Income has nothing to do with wealth, assets for the purposes of means testing, since, without wealth or assets, income can vary wildly from year to year."

Income CAN vary wildly from year to year, but for a retired person it typically won't. And for a poor retired person (the ones we are protecting remember) it is even less like to vary wildly from year to year.

If you must you could count trust income as 'income' without much trouble. Really the only income area that I suspect would be a large problem would be house wealth from a wildly appreciating housing market. If we chose, we could exempt it. Or not.

I really don't think the objection that means testing won't perfectly filter out all the rich people makes sense when the proposed alternative is to let all rich people get Social Security.

[CaseyL]

Each of the proposed "fixes" make the system more cumbersome, more expensive, and more vulnerable to manipulation.

Rich people getting SocSec doesn't burn me nearly as much as middle class people not getting SocSec. And the latest version of Bush's phase-out really does earn the name phase-out, because that's exactly what he's proposing.

[CharleyCarp]

Sebastian, the most persuasive argument against means testing is that the deal won't stick. Can you think of a way to set up the system so that future Congresses can't reduce the benefits?

[Bruce Baugh]

Sebastian, I find it odd that anyone would think of means testing as just applying to income, and I want to make sure i'm not misunderstanding. (I'm tired and my allergies are in high gear, so the probability of me misreading is quite high.) Do you mean to say that you don't think of accumulated wealth as very significant in your consideration of who deserves Social Security? And do you think that those in or near power in favor of means testing agree? I'm certainly prepared to be surprised here, but that would represent a really significant break in the practice of means testing as I understand it applied in, well, pretty much any other case.

(As long as I'm writing about efficiencies...it would be a significant savings in time and effort for government benefits not to be taxed. It is frankly stupid for one agency to write a check and then have another collect part of it right back. Set the benefit amount to be what you want it to be after taxes and pay that. A smart congresscritter of either party could pitch this on grounds of both fairness and efficiency, but I don't expect anyone to.)

[Bruce Baugh]

CaseyL, well put. I would much rather have a fair number of people who don't especially (or even at al) need it get Social Security than have anyone who would really benefit from it do without.

[Sebastian Holsclaw]

"Each of the proposed "fixes" make the system more cumbersome, more expensive, and more vulnerable to manipulation."

I honestly do not understand this objection. If we are positing that Social Security is supposed to keep old people from being poor (which apparently we mostly do when it can be used as an attack on those who question the Social Security orthodoxy) "more vulnerable to manipulation" would mean that some rich people who don't need it get it any way. But your alternative is that the manipulation go on at the government level (apparently as $6 billion or more bribe to keep Social Security popular) such that 100% of all rich people get it. That doesn't make sense as an objection. It makes no sense to say "Sebastian your proposal would let some rich people get Social Security, that makes your proposal bad therefore we need to give the money to all rich people." That makes no sense.

Charley, you write:

Sebastian, the most persuasive argument against means testing is that the deal won't stick. Can you think of a way to set up the system so that future Congresses can't reduce the benefits?

Of course I can't. But A) the system will be much cheaper so people will be less interested in cutting it. B) The system will be fairer so should still have lots of support in that form. C) The system has no guarantee that Congress can't reduce benefits now. In fact it has done so repeatedly by raising the retirement age with far less notice than any changes than I would ever propose.

[Jesurgislac]

Sebastian: Jesurgislac, I'm not willing to count people who fail to apply for a benefit under 'means testing failing poorest pensioners'.

Then you are not looking at one of the major ways in which making a benefit means-tested fails the people who need it: inevitably, some of the people who are entitled to the benefit will not apply for it, either because they think of means-testing as for "poor people" and they're convinced they are not poor enough to deserve it - or are too proud to define themselves as "poor" and will not: or because they cannot face the complications and embarrassment of means-testing. This is a serious problem with all means-tested benefits, and inevitably results in a fairly significant number of people who are not served by it.

And (supposing you were running Social Security) if you were "not willing to count" such people, it would mean that the program you were running would inevitably be a failure, in that people you weren't willing to count would be entitled to receive means-tested Social Security but wouldn't get it.